Prepare now for end of cheap oil - report

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Postponing action should end now - Palmerston North should be preparing for future rises in the price of oil, warns a city councillor.

A report commissioned by the Palmerston North City Council has found that cities and towns could still prosper in a "post cheap oil world".

But councillor Chris Teo-Sherrell said preparations should be made now to improve public transport and cycling infrastructure and to ensure facilities and services were accessible to city residents.

"We need to start doing it now rather than thinking we can put if off and off and off.

"When we have to do it everyone else is going to have to do it and then it will be a case of who has the biggest chequebook.

"There are three things that could help - good public transport, making sure facilities and services are relatively close to where people live - at the moment everything's in the centre of the city - and making it safer for cycling."

Steve Abley, lead author of the report, said by far the biggest use of oil was petrol and diesel for private travel and freight.

"All towns and cities in New Zealand are oil dependent, but we know very little about how they plan for life when oil becomes much more expensive.

"This study is unique because it takes the oil resource debate from a theoretical position, and applies engineering and economic analytics to forecast what might happen in a post cheap oil environment."

Mr Abley said the study found that Palmerston North could be well-placed to withstand an oil shock if it took steps now to reduce fuel use.

"With the right adaption techniques, Palmerston North has the opportunity to change while also maintaining economic momentum and resident lifestyles. There are other benefits too, such as improved health, community and lifestyle outcomes.

"In contrast, without lessening the demand for oil, Palmerston North would suffer severe economic impacts. Like a lot of cities and towns, it has never had to be energy resilient," Mr Abley said.

"The dominant conclusion is New Zealand can still be prosperous in a post cheap oil world, but there is increasing risk if the commitment to reduce transport fuel demand is deferred."

Study co-author Dr Garry McDonald, a director of Market Economics Ltd, said the number of people employed in Palmerston North could decline sharply if measures were not put in place to respond to a post cheap oil environment.

"Where one of the key inputs for an economy is removed, such as oil, there are effects on the supply of goods, and also on the demand for goods; the result is the economy slows down significantly."